BILL ANALYSIS


                                                        H.B. 1503
                                         By: Yarbrough (Whitmire)
                                      Intergovernmental Relations
                                                          4-27-95
                              Senate Committee Report (Unamended)
BACKGROUND

The City of Houston Municipal Employees' Pension System (system) is
governed by Article 6243(g), V.T.C.S.  This article applies only to
the City of Houston.  The pension system is governed by a board of
directors (board).  The board and the system are charged with
administering a two-track pension system, referred to in the
statute as Group A and Group B.  Presently, the board has sole
responsibility for its actions as set out in Sections 5(a) and (h)
and Section 20, Article 6243(g).

PURPOSE

As proposed, H.B. 1503 sets forth provisions relating to
participation in, administration of, and benefits from certain
municipal retirement systems.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 358, Article 6243g, V.T.C.S., by adding
Sections 3A and 3B, as follows:

     Sec. 3A.  (a)  Requires a person who becomes a member or
     resumes membership in the pension system as an employee or
     elected official of a city to elect to become a Group A or
     Group B member.
     
     (b)  Prohibits the date determined for the beginning of
       elections under this section from being before January 1,
       1996.
       
       Sec. 3B.  (a)  Requires each member of the pension system to
     make a one-time, irrevocable election to retain membership in
     a group currently joined by the member or change membership to
     or from Group A to or from Group B.
     
     (b)  Requires a person who makes the election to pay into
       the pension fund all contributions that would have been
       deducted as member contributions to Group A during the
       period that the person was a Group B member.  Requires
       payments of these amounts to be completed within the
       earliest of certain dates.  Authorizes a member or the
       member's estate to either make an immediate payment of the
       balance due or to receive a refund, without interest, of the
       member's contributions to Group A if the payments are not
       completed within this period.  Provides that a member is
       considered to have been a Group B member during the period
       since the member's election and resumes membership in Group
       B if a refund is paid under this subsection.
       
       (c)  Requires the pension board to prepare and distribute a
       brochure containing certain information on an election and
       to designate one or more persons to be available to provide
       additional information about the election.
       
       (d)  Requires an election to be on a board approved form and
       notarized on execution.  Requires the form to include
       certain information.
       
       (e)  Prohibits the date determined for the election from
       being before January 1, 1996.
       
       SECTION 2.   Amends Section 5(a) and (h), Article 6243g, V.T.C.S.,
as follows:

     (a)  Creates a pension board of the pension system to receive,
     handle, control, manage, and disburse the pension fund for the
     respective city.
     
          (h)  Requires the pension board to adopt written rules and
     guidelines for the administration of the pension board,
     reconcile any inconsistency in this Act, and establish and
     maintain all records necessary or appropriate for the proper
     administration of the pension fund.  Deletes provisions
     relating to the manner of distribution of funds.
     
     SECTION 3.     Amends Section 6, Article 6243g, V.T.C.S., to delete
provisions requiring all moneys collected be paid over to the city
treasurer.

SECTION 4. Amends Section 23(b), Article 6243g, V.T.C.S., to
require a Group B member to become eligible to receive a normal
pension if the member has attained a certain age and a certain
number of years of credited service.

SECTION 5. Amends Chapter 358, Article 6243g, V.T.C.S., by adding
Section 31A, as follows:

     Sec. 31A.  (a)  Authorizes a pension board to pay a member or
     other beneficiary in a lump sum the present value of any
     benefit payable to a Group A or Group B member that is less
     than $10,000, in lieu of any other benefit payable under this
     Act and notwithstanding anything in this Act to the contrary. 
     Authorizes the board to make a lump sum payment only on
     written request by the member or other beneficiary if the lump
     sum present value of the benefit is at least $3,500 but less
     than $10,000.  Requires the board to make any payments as soon
     as practicable after a member's termination of employment,
     death, divorce, or election to receive a previously deferred
     pension.
     
     (b)  Requires the pension board to adopt actuarial
       assumptions to be used in determining lump sum present
       values and amounts distributable.
       
       (c)  Provides that payments under this section will be paid
       monthly in amounts determined by the board, if the board
       determines that available resources in the fund are
       inadequate to make lump sum payments.
       
       (d)  Prohibits payments under this section from being made
       for a benefit that was being paid before September 1, 1995.
       
     SECTION 6.     Repealer:  Sections 23(d) and 24(b), Article 6243g,
V.T.C.S. (Eligibility for Pension - Amount of Pension).

SECTION 7. Effective date: September 1, 1995.

SECTION 8. Emergency clause.